After a decline in September, German small and medium-sized enterprises (SMEs) are reporting renewed optimism about the future, according to the latest KfW ifo SME Barometer. The business climate index for October increased by 1.3 points to -14.6 balance points. While this marks a slight improvement, the figure remains below the long-term average.
KfW Research attributes this gradual upward trend since the beginning of the year mainly to rising expectations for future business conditions among SMEs. However, many companies continue to assess their current economic situation negatively.
Dr Dirk Schumacher, Chief Economist at KfW, commented: “Businesses in Germany are hoping the economic conditions will improve soon”.
He added: "There are high expectations that the German Federal Government will swiftly implement the announced fiscal package. Many businesses rate their current business situation as not good. There is therefore significant pressure to take action."
Large businesses also saw an increase in their business climate index in October, rising by 2.2 points to -16.3 balance points. This improvement was entirely due to more positive expectations about future developments, while assessments of current conditions declined further compared to September. In addition, large companies remain pessimistic about employment prospects and may consider reducing staff numbers.
In contrast, employment expectations among SMEs improved slightly during October and remain less negative than those of larger firms.
KfW provides various support programmes for SMEs on behalf of the German Federal Government.
The full results from the most recent KfW-ifo SME Barometer can be accessed on KfW’s website: https://www.kfw.de/KfW-Konzern/KfW-Research/Konjunktur-und-Wachstum/KfW-ifo-Mittelstandsbarometer.html